Simplot has started negotiations with Woolworths to supply its home brand frozen vegetable range.

A deal could help Simplot's Tasmanian operation to survive its battle against cheap frozen vegetable imports.

The company will close its Devonport plant within five years unless its finances improve.

It has until next month to find a solution or more than 300 jobs could be axed.

Tasmanian farmer Richard Bovill says it should not be seen as a quick fix solution.

"I think it can help to underpin the survival of the factory and its a reason why we should work harder now to make sure we've got a strong and viable vegetable processing industry," he said.

Another farmer Mike Badcock says better labelling could help compete them against imports.

"I understand this product will be "Australian-grown" labelled on the front so the consumers can actually choose the product they buy and it's something we've been telling governments and everybody else for probably the last 15 years."

The company expects to put a case for assistance for its Devonport plant to the Federal Government soon.